Tonight Feburary 15th,2011 President Obama will unveil his budget for the federal government for the fiscal year 2012. The budget will be around $3.73 trillion with a deficit of approximately $1.1 trillionThis deficit will be about 500 billion less that the $1.6 trillion for 2011.However as good as this looks it does not tell the true story.,but we will get into that in a few moments.Now these figures are truely astounding.The national debt for the fiscal year 2010 is $14 trillion dollars. Now before we go any futher ,it might be a good idea if with spelled out excatly what each of the following terms mean
1)Budget-comprises total expenditures and the total receipts of the federal government
2)Deficit- total expenditures less total receipts(such as income taxes)received.
3)National Debt-acculmation of every year's deficit since 1789 less all accumulated surpluses.(since 1789 we have had only 13 years with surpluses)
4)Debt intrest payments-amount paid to investors who have bought treasury bill and bonds.
Ok,now that we have the terms defined we can proceed to the discussion at hand.Over the next few days and weeks the budget deficit,national debt and it's intrest payments will be front and center in the public consciousness.Events around the world will take a back seat to the discussion about our fiscal health,unless some government around the world falls in a revolution.Now the argument will revolve around what is necessary spending,how much and were spending should be cut.Now let us look at the supposed drop in the deficit from last year.This drop consists of $90 billion in cuts and around $410 billion in new taxes.Smoke and mirrors,if you don't look to closely it looks great.Another trick of smoke and mirrors is the statement that some sort of cut will reduce the deficit over ten years.Did you spot the trick,No,well here it is. When they say that cutting the deficit this year by $so much and thus save this amount over the next decade,they assume that the amount saved this year will automaticly be added to the budget the following year.Therefore we can say we won't add that amount to the federal budget and thus reduce the deficit by that much.
Smoke and mirrors,that all the politicans are offering us. Now that the question is can we resolve the problem of the national debt with just spending cuts without raising taxes.What if the raise in taxes is targeted at paying down the debt?Would that be acceptable?How about the President Obama's pledge to cut the deficit by half by the end of his first term.Did you spot the trick?Actually there were two.The first is that the president is saying no longer will we operate on $1.6 trillion dollar deficit but only on $800 billion deficit.Now that is progress isn't it.The second trick is that the president is saying that I will have a second term and will continue my austerity program.Smoke and Mirrors,that's all they seem to be offering us. Lets look at our reflection in the fun houses mirror.See the reflection shows us as skinny,well great.I no longer have to worry about my diet,after all my reflection is skinny,just look at it.
If nothing catches my eye tonight,well look at ways in which he deficit can be tackled without all the smoke and mirrors. But as to what answers to the deficit the politicians offer us,do you believe them? I know what I believe but as usual what do you believe?